(Secured debts are attached to a specific asset and receive priority. They will use it to pay off your unsecured debts. Once you have calculated the value of your disposable income and the value of your non-exempt property, you will need to pay the greater of these amounts to the bankruptcy trustee. In some cases, an asset may be exempt only in part because the asset is worth more than the value of the exemption.įilers in a state with the option to use either the state or federal exemption system may benefit from calculating their possible exemptions under each before making the choice. Meanwhile, you will need to determine which assets are exempt and subtract that value from the total value of your assets. You then will need to multiply the result by the number of months in your repayment plan, which will last for 36 to 60 months (three to five years). Calculating your disposable income involves calculating your monthly income and subtracting your living expenses from it. The key factors in this situation are the debtor’s disposable income and the value of their non-exempt property. In devising a repayment plan under Chapter 13, a debtor will need to calculate their income, property, debts, and expenses. The Impact of Exemptions Under Chapter 13 This is because payments under the plan are calculated according to the value of the debtor’s non-exempt property. However, exemptions affect the monthly payments under the Chapter 13 repayment plan. A debtor who files under Chapter 13 will keep their assets and develop a repayment plan to pay off their debts, so they do not need an exemption to avoid losing an asset. Exemptions play a less straightforward role in a Chapter 13 bankruptcy than in a Chapter 7 bankruptcy.
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